Exactly how big is the role of content behind the success of Electronics and IoT businesses? Is it worth investing money in? As Indian technopreneurs run after innovation and technical evolution, are they leveraging the power of technical content to the fullest? Aroop Zutshi, global president and managing partner of Frost & Sullivan answers these questions to Baishakhi Dutta of Electronicsforu.com Network in an exclusive interaction.
Q) How do you see the IoT industry involving?
IoT is not something new that has emerged in the last 5-10 years. Connected devices started when we first had the internet revolution through the channel of communication was very different at that time. Over the years this has evolved for many reasons.
One of the biggest reason is the significant price drop in sensors. With this, we have started seeing a tremendous proliferation of sensors. I consider sensarisation to be one of the biggest trends which are enabling the growth of IoT. Yes, we do see IoT based infrastructure getting bigger and being implemented worldwide since the cost of implementation has gone down.
Q) Has India witnessed the full potential of IoT yet?
No, the full potential of IoT has not yet been touched upon. And by that, I mean India and pretty much globally as well. But if you ask will we have a bigger impact of IoT in the long run, then yes, we would for sure! This mega-shift towards IoT has already started catching its momentum. Going forward I predict that every home, retail outlet, grocery store, etc will be sensorised. With 5G coming in, this is going to completely revolutionise the IoT implementation. With the latency dropping, now people can do applications that they were struggling with so long. So 5G will be a major enabler which will boost the IoT industry.
Q) Which industry segments do you believe will be driving a larger chunk of demand in IoT?
One of the biggest sectors is retail. We see tremendous growth of IoT in e-commerce and supply chain management. This drive is primarily because of the current generation of consumers who wants instant gratification. One of the big challenges for large e-commerce companies is the last mile delivery. That has been well taken care of because of IoT.
The second big area is manufacturing. Medium to large to mega enterprises all across the world, including India is IoT enabled. IoT is not just helping increasing manufacturing efficiency, product improvement, and cost reduction but it is also playing a vital role in security and that is why cybersecurity is a major area that has come under the direct influence of IoT.
The third area is connected cars. Cars are the biggest example of connected devices with electric vehicles now being a big trend. I would like to call it the trend of electrification. Today there are more than 10,000 sensors in any car which shows that sensorisation is happening in cars as well and days are ahead when your car will no longer be a car, but a prime example of a connected device.
So, these are some of the prime domains that will enjoy the major demand from customers across the globe.
Q) Despite the availability of so much potential, why do you think India has not yet been able to catch the bus?
The reason why manufacturers are not necessarily jumping into the IoT bandwagon is a lot of senior leaders who make these business decisions do not understand the crucial elements and components of an IoT enabled system fully. Not many clearly understand the implications of advanced technologies like Bigdata, blockchain, machine learning AR/VR, IoT, etc and this is primarily due to lack of proper knowledge accompanied by fear of failure. It is mainly because of the fear of failure that despite understanding the value of these emerging technologies, a lot of company are hesitant to apply these.
On the other hand, from the vendor side, many companies are not providing solutions that are tailor-made for the size of an organisation. We still have not got it productised to cater to small, medium and big enterprises and because of this shortage, the entire IoT game sounds too complex and complicated ultimately leading to delay in decision making followed by implementation. But we have to realise that these are trends that take time to get adopted. I believe as 5G rolls out, more and more people will feel confident to adopt IoT.
Q) Can we deduce that the IoT ecosystem is still bleak with limited availability of used case studies?
Yes, very much. It is a very valid point that there are not too many case studies that people can refer to. A lot of business outcomes has not been popularised. As a part of the case study, if you provide business outcome justification, I think there will be bigger adoption.
Currently, we do not see much of that business outcome. That’s why I always say, technology for the sake of technology means nothing. Technology with a business outcome is when implementation happens. This is where vendor community who provides solutions has to focus on and come up with more business outcome, case studies and most importantly educate the market. Sadly, India is still stuck in that education phase.
Q) In order to bridge the awareness gap, how does F&S come into play? What are your solutions to your customers?
The foundation of our organisation is research. Over the years, around 1000 analysts worldwide are tracking 33 different industries. Currently, we are tracking 275000 segments. We are studying some of the biggest trends in the market along with how customer behavior is changing overtimes. We have been looking at macroeconomic trends and predicting what the future will look like along with how companies have to prepare for the future. Our research is consumed by companies worldwide. To educate the mass, we have started speaking on this and promoting this idea at various levels. We are using multiple channels like our events, social media platforms to communicate and educate our audience which includes vendor community, service providers, the government and non-government organisations.
Our researches are also brought by our clients on subscription based model which helps them get access to all such crucial information that will enable the growth of their organisation and most importantly the effective way of implementing it so that they derive the maximum business benefits. This entire shift is possible with the help of research and that is the role we are playing very effectively to support our clients and prepare them for the upcoming wave of technological disruption.
Q) What role content is playing in helping CXOs take business decisions? How has the role of content changed over the years?
At present, the availability of the right content is critical for any important business decision making. Getting baseline information of where we are is very important because without that you are shooting in the dark.
The most important part is packaging the content and making it meaningful to a customer. Content that does not drive decision making, is of very limited value and this is where we have seen the shift happening in the past couple of years. Our content was very measurement driven in the past which included market size, growth rate, trends, etc. But now it has evolved drastically. Now contents have become theme based. At the same time now content has become digitally available. At present, content needs to come in a format which is compact, relevant, crisp (preferably bullet points) and the frequency of such content has to be very high. These are the changes that we have done in our business model too.
Q) Does F&S research include live case studies?
Yes, we do have regional case studies. Each of the market that we study, we have two frameworks that we follow. Such a framework includes customers as well as competitors. Our customer case studies clearly depict how the client has implemented it and the outcome generated. Talking about case studies, we study the impact, benefit as well as the outcome. Customers who subscribe to our research content get access to that. That enables them to go back to their drawing board and put an implementation plan.
Q) Talking about subscription, many research firms, does not give access to their research to an entire organisation. For them, separate teams within the same organisation are their customers. Does F&S also follow such a business model?
Two have two subscription models. We have an enterprise model in which clients have unlimited access to our content as well as experts. We have a group of more than 1800+ experts. So if you subscribe to the enterprise model, you get access to all.
The other model is the leadership council user licenses. These are curated content that we give to specific individuals or a group of users in a specific department within an organisation. These are smaller deals and packages and limited in terms of usage.
We also cater to client budgets accordingly. For us, enterprises are obviously larger deals but the value per individual is much better. Our digital platform allows us to ensure that we control access to the people who sign up with us.
Q) Who are your main target customers to do business with? Do you have offering for startups too?
We have a broad spectrum of clients. We have nearly all the Fortune 1000 companies along with the Tier 1 suppliers. Government is one of the biggest users of our research content. We have business and financial services which is the investment community as our major customers. Along with that, we have the startup ecosystem as our customers. So the startups either directly or through these investment arms get access to our content. We have solutions that meet the needs right from an entry level to a large scale client.
Q) What will be your approach towards MSMEs who are interested to join hands with F&S? Do you hand hold them right from the ideation stage?
As mentioned earlier, we have solutions that are applicable to the entire spectrum of businesses. We believe that technology does not make the differentiation as to where they want to be implemented. That means digitisation cuts across all spectrum and size of industries be it small, macro or big entities.
The ability of a solution that can be implemented in a medium scale organisation is very different from what it can be for higher entities. Since we have expertise in the technology domain, we can help small or medium enterprises to pick the solution that fit their needs. Digitisation does not mean you have to digitise every part of the organisation. All MSMEs does not require the same kind of support. It varies from one organisation to another. You have to understand what are the impediments and drivers of digitisation in a particular organisation. We help small and medium enterprises figure out tailor-made solutions and support them accordingly so that they can obtain the maximum business benefit from their investment. Hence F&S is open to support customers of all sizes based on what their needs are.
Q) What is the typical payment model that F&S follows while dealing with customers?
We operate in two different models. First is the ‘fix-free’ engagement model. Under this, it’s a one-time payment scheme. Majority of our big customers work with us under this contract. However, we do catch flow of our clients with regard to payment terms. Under this, clients generally have a specific issue which they want us to look into and give them a heads up as to go or not to go.
Secondly, there is also the option for customers to pay off in a duration of 3-4 months depending on the course of the projects.
But the preferred option for us is what we call the ‘retainers’. In this, we put a team together, depending on the client’s specific needs. At times these are cross-functional teams which then emerges itself with the client, understands their business issues, growth opportunities and helps them to identify, qualify and quantify and finally imply a go-to-market strategy. Hence this is the most preferred model and is generally a long term engagement model. It can be of 6-12 months and even more and it usually the expensive model. Hence, we prefer not to follow a rigid payment structure and likely to keep a flexible structure which can be modified according to the customer need.
Q) Why would a customer prefer F&S over your competitors? What extra mile are you going to draw customers?
I believe what makes us different from our competitors is the unique methodology that we follow. What makes F&S stand out from other competitors are, we look at disruptive technologies which include disruption of industries, the collapse of markets, transformation as well as the disappearance of companies which has happened only because of technology. We are the only company which studies over 3000 technologies in 9 different clusters.
We are the only firm that looks at all the big megatrends. We cover more than 13 large megatrends in the world and these are the selected top 13 out of many existing megatrends. We have deeply studied the implications of these megatrends. It is not about understanding the megatrend. It’s about understanding the social, transformative change that’s associated with such trends.
We study more than 12 new business models since we believe that companies will not necessarily look out for new products or solutions in the future for it will look out for new business models.
Our prime focus is on industry convergence. As mentioned earlier, we are the only firm in the world that looks after 33 industries along with 275000 market segments worldwide. In the future, we are bound to see more and more convergence business model coming into play and so we prepare our customers accordingly. We also focus on emerging geographies by studying more than 120 countries worldwide.
The growth that F&S believes in is not necessarily in the verticals. We believe in growth which is happening in convergence. It is when the ICT industry converges with the healthcare industry along with the energy industry because that is where a new opportunity emerges. F&S is the only research firm that is working on such kind of a model.
The interplay of all these facilities is what makes us unique and allows a customer to have a business relation with F&S over our competitors since no firm in the world will offer such models.
Q) What is F&S’s plans to expand services in the Indian market? Do you see a profitable business here?
The Indian economy is one of the fastest growing economy currently. We have not seen a relevant GDP growth recently. For F&S, India is not a small term game. For us, it is a medium to long term game. We were the first company in our field of work who had introduced a full-fledged innovation centre in Chennai way back in the late ’90s. At that time when we did not have sufficient technology to connect, we still made such investments. Now that we have such advanced technology it is easy for us to make investments and work across oceans.
We foresee a tremendous opportunity for us to grow in India. The kind of help that clients seek in USA and Europe, we have started seeing similar demands in India. Our plans to invest in India and especially in content creation remains the same since compared to F&S global business, India and China market was the fastest growing for us in the world. We already have 7 centres in India and over time we will be adding more capacity. At present, almost 30 per cent of F&S headcount is based out of India and I guarantee the growth of 40-45 per cent very soon. Alongside going forward, our work will continue to grow with the government which includes state level also.
